When recessions occur, unemployment rates tend to increase. Spain's unemployment rate has hit record highs due to it's two-tiered economic system and flexibility of it's labor force.

"As for the employment, after having completed substantial improvements over the second half of the 1990s and during the 2000s which put a few regions on the brink of full employment, Spain suffered a severe setback in October 2008 when it saw its unemployment rate surging to 1996 levels. During the period October 2007-October 2008 Spain had its unemployment rate climbing 37%, exceeding by far the unemployment surge of past economic crisis like 1993's. In particular, during this particular month of October 2008, Spain suffered its worse unemployment rise ever recorded and, so far, the country is suffering Europe's biggest unemployment crisis. By July 2009, it had shed 1.2 million jobs in one year and was to have the same number of jobless as France and Italy combined. Spain's unemployment rate hit 17.4% at the end of March, with the jobless total now having doubled over the past 12 months, when two million people lost their jobs. In this same month, Spain for the first time in her history had over 4,000,000 people unemployed, an especially shocking figure even for a country which had become used to grim unemployment data. Although rapidly slowing, large scale immigration continued throughout 2008 despite the severe unemployment crisis, thereby worsening an already grave situation. There are now indications that established immigrants have begun to leave, although many that have are still retaining a household in Spain due to the poor conditions that exist in their country of origin.

Spain's unemployment rate surged after a long period of decreasing unemployment (read: increasing employment). This helped to propel the economy and increase wealth, however, the structure of Spain economy and their main employment industries were prone to collapse.

Spain has a two-tiered employment system, where some employees are very difficult to fire, while the rest are extremely easy to fire. This system does not rely on the skill level of the individual, which give a disincentive for permanent employees to relax, which translates into lower productivity.

Additionally, Spain's reliance on construction jobs maybe the country vulnerable to recessions and housing bubbles, which lead to the disappearance of thousands of jobs."